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Thursday, March 15, 2018

Muscovites and residents of suburbs to save on food more than others

Russians are tightening the belt: at the end of the last month of summer, according to another research holding, the population has reduced its costs by 2%. Tendency, to put it mildly, unpleasant. The annual ratio growth expenditure amounted to 0.7%. It would seem that we are still in the black. But only if you do not draw a parallel with the accumulated inflation, which reached almost 7%. That is, “cleaned” from inflation the cost today is even below the value for 2012.

photo: Gennady Cherkasov

Then without any statistics it is clear that we have to live worse. Not helped by the zero calculated by Rosstat in August, the inflation that occurred amid falling prices for seasonal vegetables and fruits. Food commodities over the past month fell by 0.6 percent, non-food price increased by 0.4%, services rose in price by 0.3%.

According to sociologists, in previous years was also observed summer decline in consumer activity — a in this period is traditionally supplied by their own crops. Usually, however, reaching a bottom in June and July, in August was zero correction. This year this has not happened, the Russians continued to cut the family budget. The average check for seven months in a row saves the minimum value: 498 rubles for one trip to the store. Against the background of spending cuts this suggests that consumers are now less likely to go to the shops.

The most economical was the residents of the Moscow region and the surrounding areas. In August compared with July, they reduced their spending on average by almost 10%. Residents of St. Petersburg shrank by 5%.

So what saves the average Russian? First and foremost, on food. Instead of beef we started to eat pork and chicken, stored cereals and lean on high-calorie bread. Also, our compatriots began to drink less coffee and eat chocolate. Less now bought new clothes and shoes.

What’s next? Whether the Russians are preparing for even greater savings on their own needs? On this reasoning economists.

Natalya Milchakova, Director of the analytical Department of Alpari:

“A dismal time to prepare it is not necessary, as the bottom of the economic crisis we, apparently, took place in late 2015 and the beginning of the current. Starting in 2016, the ruble strengthened along with the growth of oil prices (the strengthening of the ruble in the current year amounted to 13.5%), and annual inflation is at a level not exceeding 6% (in 2015, annual inflation amounted to almost 13%), hence an increase in real disposable income next year, already have the prerequisites.

However, excessive optimism, too, there is no. Despite the strengthening of the ruble and reduction of inflation, recession still continues: GDP and industrial production falls, unemployment by Russian standards, is also still high, many employers cut wages or freeze its growth. For some businesses, the problem is the months-long delays in payments of salaries to employees, and it is almost a form of hidden unemployment. All these factors do inhibit the growth of nominal incomes of the population, thus negating the positive effects of strengthening of the ruble and lower inflation.

It can be assumed that the economy will resume growth next year. According to our estimates, Russian GDP will grow by 1.2%, approximately the same amount will increase and the volume of industrial production that will contribute to the further strengthening of the ruble and reduction of inflation. According to our estimates, the nominal wage growth in Russia will resume when the annual rate of inflation in Russia will reach the level of 4-5%, and the ruble will return to the levels of 60 to 62 rubles per dollar. Then we can talk about return to growth in real disposable incomes.

However, if the government after the elections did take a decision to increase the personal income tax rate, it will be able to significantly prevent the growth of real disposable income. Although this scenario is unlikely.”


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